Derrick v Mitchell & Ors [2019] QCATA 23

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Derrick v Mitchell & Ors [2019] QCATA 23 PARTIES: ROBERT CHARLES DERRICK (applicant/appellant) v HAMISH MITCHELL RUI GUAN 360 PROPERTY MANAGEMENT (respondent) APPLICATION NO/S: APL005-18 ORIGINATING APPLICATION NO/S: MCD T285/17 MATTER TYPE: Appeals DELIVERED ON: 1 February 2019 HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Justice Carmody ORDERS: The application for leave to appeal or appeal is refused. CATCHWORDS: APPEAL – MINOR CIVIL DISPUTE – RESIDENTIAL TENANCY – where the applicant for leave argues the tribunal erred in awarding compensation against him for uncontested breaches by sub-tenants in exclusive occupation because he is named as tenant in the written residential tenancy agreement and dismissing his counter- application – where the property agent acquiesced in the residential arrangement – where the oral sub-tenancy was held to be merely a “licence” that did not have the legal effect of relieving the applicant of primary responsibility for rent and meeting the statutory obligations. Queensland Civil and Administrative Tribunal Act 2009 (Qld) ss 12, 13, 32, 93, 142 Queensland Civil and Administrative Rules 2009 (Qld) r 48 Residential Tenancy and Rooming Accommodation Act 2008 (Qld) ss 8(1), 11, 12, 13, 217, 238, 239, 243(2)(a), 253, 419 N B Hayward Pty Ltd t/as MC Engineering v Warren Dunell & Associates Pty Ltd [2014] QCATA 342 -- 1 of 6 -- 2 APPEARANCES: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act). REASONS FOR DECISION [1] The issue in this application is whether to grant leave to appeal a tribunal decision awarding the respondents end of tenancy compensation for the tenant’s breach of the repair and yield up obligations. The context [2] In 285/17 the applicant is seeking a declaration that, except for the painting and electrical work his son, Corey, and partner, Clarissa, (not him) are fully liable for any compensation for the substandard exit condition of the premises under a sub-letting arrangement and that the counter-application be allowed. [3] The applicant is the tenant named in item 2 of the general terms of agreement. [4] The respondent is a property agent for the premises (trading as 360) authorised to stand in for the lessor. [5] The tenancy ran for a fixed 12 month term from 10 February 2016. [6] The applicant left to work in Darwin on 3 May 2016. Corey and Clarissa formally applied to take over the lease from that date but their application was declined by the owner because they were listed on a tenancy database for a prescribed reason. [7] Corey and Clarissa continued residing at the premises with or without the agent’s knowledge and between them reimbursed the applicant for rent until the end date. [8] The respondent inspected the premises four times during the term but took no breach action or steps to terminate the tenancy. The applicant contends that in these circumstances the lessor is estopped from denying the subletting arrangement and at the ‘very least’ failed to mitigate any compensable economic losses. The agent admits knowing that the applicant was out of State but did not assume that just because the son and partner were residing at the property that they were sub-tenants under a verbal or implied residential tenancy agreement rather than long-term guests. [9] On 10 November 2016 360 contacted the applicant about the “bad state” of the premises. According to it, agents cannot sub-let the premises unless the owners approved a written application and any breach remains the named lessee’s responsibility regardless of who was actually living in the premises as guests or otherwise. [10] The applicant served notice of intention to leave in December 2016. [11] Initially the $1,120 bond was voluntarily “forfeited” by the applicant at the end of the lease in February 2017 to cover water use, repainting and cleaning but the parties later applied for rival tribunal relief. The agents sought for compensation on the owner’s behalf for: -- 2 of 6 -- 3 • new carpet $2610.00 • mowing $ 104.50 • fan and bulb replacement $ 308.00 • filing fees $ 112.50 [12] The basis of the claim was variously (mis)identified at the hearing as s 26 (malicious damage) and s 253 (intentional and/or reckless damage) (Residential Tenancy and Rooming Accommodation Act 2008 (Qld) (RTRA Act)). [13] The tribunal found there was inadequate proof of the mental element of either and correctly characterised the dispute as a compensation claim for breaches and applied orthodox privity principles in resolving it. [14] The applicant counter-applied against Corey and Clarissa as being directly liable for any tenancy debt or alternatively, were obliged in effect to indemnify him against any order but they were never served or formally joined to the proceeding. [15] The tribunal ruled that the applicant had granted an informed licence to exclusively occupy the premises to Corey and Clarissa not a sublease and therefore had to bear primary personal liability for compensation before going on to make an order requiring him to pay $2341 of the claim comprising: $1861 for replacing a five year old depreciated carpet originally valued at $5300 with rental quality carpet costing $2610 Mowing $104.50 Fan and Bulbs $308.00 Filing fees $112.50 [16] The proposed grounds of appeal complain that the tribunal wrongly:  received bond receipts as new evidence of liability and quantum for $770 he agreed to being paid out of the bond money for painting and electrical repairs without allowing for a response  referred to the counter application as a response  dismissed the counter application based on the mistaken basis that the sub- letting was a licence Alleged error in holding the applicant liable for painting work completed three (3) months after the tenancy ended [17] The invoice for painting was paid on 17 June 2017 but the vacate date was 10 February 2017. New tenants moved in around March 2017. According to the applicant there is insufficient evidence establishing that the painting work was attributable to the tenancy. When the applicant raised these issues at the hearing it was dismissed as “new evidence” despite it being in the respondent’s documents filed 3 October 2017. [18] The bond money the applicant willingly forfeited was used to pay for repainting. The damage was listed on the exit condition report and according to the respondent delay -- 3 of 6 -- 4 in works being completed after February 2017 was due to the bond being released late and working around the new tenant’s schedule. [19] No arguable appellable error or substantial injustice is demonstrated. In any case technically speaking the applicant has no right to appeal this item under s 142 QCAT Act because the tribunal did not make “a decision” including an order about it. Error in awarding compensation for faulty fans and bulbs [20] The invoice dated 19 June 2017 for $308.00 from Meng Electrical refers to “faulty stainless steel ceiling fan” and “faulty sensor light”. The applicant argues that faulty items are not the tenant’s responsibility. [21] The property agent says fans and bulbs were not “faulty” but bent and blown. [22] The tribunal’s remark at T1-4:40-45 (6/11/2018) that $308 was relatively reasonable for bulbs and fan is based on experience which is a fair and reasonable basis for resolving the tenancy disputes quickly and cheaply. [23] No issue was raised about liability for either the electrical repairs costs in the material and as with the painting work the tribunal did not make any order or decision about this item and, therefore, s 142 QCAT Act does not provide a right of appeal with leave or otherwise. The tribunal erred in referring to the counter-claim as a response [24] The referral to the Form 8 as a “response or counter application” at T1-6:25 is inconsequential and not a basis for the appellate intervention. [25] Except for a minor debt claim Rule 48 (Queensland Civil and Administrative Rules 2009 (Rules)) does not require (or allow) MCD respondents to file evidence in the form of a response but does not prevent a cross application in Form 8 being filed. [26] If served the counterclaim could (and probably should) have been heard and decided in default of appearance.1 [27] However, there is no basis for allowing the counter application against Corey and Clarissa because neither appeared and there is no proof of service on file as required by s 93 QCAT Act before the discretion to hear and decide a matter in a party’s absence. [28] However, it is unlikely that either Corey and Clarissa know about the application against them. A file note dated 17 August 2018 notes “the respondent lodged a counter application … that he sublet rental property and they should be liable for debt. Should this matter be listed a hearing to enable the sub-tenants to be joined to the action before the matter is listed for hearing or will you joined them on the papers”. [29] The matter was set for “further mention 11/9/2017 … re submissions to join sub lessor/s”. The applicant did not appear on that day. 1 N B Hayward Pty Ltd t/as MC Engineering v Warren Dunell & Associates Pty Ltd [2014] QCATA 342. -- 4 of 6 -- 5 [30] A subsequent file note dated 11/9/17 asks whether the “subtenants” should be advised of hearing date following counter-application being lodged. The answer is “not at this stage”. [31] The issue of the legal liability of Corey and or Clarissa because of damage to the premises remains the applicant’s for the tribunal order and bond release because they breached implied repair and yield up terms of the licence is still unresolved. The applicant can make a separate application for that matter under s 12(4)(a) QCAT Act as a person incurring loss despite the dismissal of the counter application. Any claim for breach of the asserted sublease under s 419(2) RTRA Act is subject to the six month rule in s 419(4) RTRA Act despite the dismissal of the counter claim. The tribunal erred in ruling the sub-tenancy was a “licence” [32] As to this the applicant argues: • there was an oral agreement between Corey, Clarissa and the applicant that created a sub-tenancy such an agreement is not required to be in writing • the tribunal did not consider the difference between a lease and licence, including the exclusive possession test, and if they had would have found that Corey and Clarissa had exclusive possession of the property • there was no written permission from the lessor, however the lessor’s agent was aware of the agreement • the lessor should have breached the applicant if they did not accept the sub- tenancy • the agent did not re-advertise the property despite knowing the applicant was in Darwin indicating awareness of/agreement to the sub-tenancy arrangement [33] Under the RTRA Act a residential tenancy is the right to occupy residential premises under a tenancy agreement.2 [34] A residential tenancy agreement is an agreement under which a person gives someone else a residence whether or not exclusively and partly or fully oral or wholly implied.3 [35] A tenant is the person given the right to occupy under a residential tenancy agreement4 and includes the sub-tenant of a tenant.5 [36] The lessor (not a tenant) is defined as the person who gives the right to occupy residential premises under a tenancy agreement6 but the term includes a tenant who has given the right to occupy the premises to a sub-tenant. [37] A “sub-tenant” for the purposes of the RTRA Act is not defined; nor is ‘sub-tenancy’ or ‘right to occupy’. 2 Section 11. 3 RTRA Act ss 12(1), (2), (3)(a)-(b). 4 RTRA Act s 13(1). 5 RTRA Act s 13(2)(b). 6 RTRA Act s 8(1). -- 5 of 6 -- 6 [38] Tenants’ obligations include notifying the owner or agent of damage and need for repair,7 keeping the premises and inclusions clean, not maliciously damaging the premises and inclusions directly or indirectly and yielding up in same condition excepting fair wear and tear. [39] An ‘occupant’ of premises means a person residing there including as a short term ‘guest’. [40] The premises may be sublet is transferable under s 238(2) only if the lessor agrees in writing or by tribunal order. The lessor cannot unreasonably block transfer or subletting.8 The likelihood of the proposed transferee or sub-tenant meeting the tenant’s obligations under the agreement and the assessed degree of risk of damage are two relevant reasonableness considerations.9 [41] Alternatively, a person occupying the premises who is not the tenant under an agreement may apply to the tribunal to be recognised as the tenant.10 Neither of the statutory methods of transferring the applicant’s tenancy obligations under the agreement was availed of. [42] Accordingly, there is no legal error in ruling the applicant was personally liable for breach of the yield up condition of the tenancy. [43] The tribunal was also right to hold that the licence agreement did not bind the owner or the agent’s knowledge of it preclude reliance on s 419(2) RTRA Act against the applicant. [44] In any case as no specific order dismissing counter application under s 13 QCAT Act was made there is no right to appeal. The proceeding is still on foot and any injustice to the applicant can be cured by properly joining and serving Corey and Clarissa. 7 RTRA Act s 217. 8 RTRA Act s 238(3). 9 cf RTRA Act s 239(3)-(4). 10 RTRA Act s 243(2)(a). -- 6 of 6 --